US Consumer Confidence Improved Substantially in June

RV Business

The Conference Board Consumer Confidence Index increased in June to 109.7 (1985=100), up from 102.5 in May, according to a release.

The Present Situation Index — based on consumers’ assessment of current business and labor market conditions — rose to 155.3 (1985=100) from 148.9 last month. The Expectations Index — based on consumers’ short-term outlook for income, business, and labor market conditions — rose to 79.3 (1985=100) from 71.5 in May. Expectations have remained below 80 — the level associated with a recession within the next year — every month since February 2022, with the exception of a brief uptick in December 2022. However, June’s reading was just a shade below 80 and up sharply from last month’s print.

“Consumer confidence improved in June to its highest level since January 2022, reflecting improved current conditions and a pop in expectations,” said Dana Peterson, Chief Economist at The Conference Board. “Greater confidence was most evident among consumers under age 35, and consumers earning incomes over $35,000. Nonetheless, the expectations gauge continued to signal consumers anticipating a recession at some point over the next 6 to 12 months.”

“Assessments of the present situation rose in June on sunnier views of both business and employment conditions. Indeed, the spread between consumers saying jobs are ‘plentiful’ versus ‘not so plentiful’ widened, indicating upbeat feelings about a labor market that continues to outperform. Likewise, expectations for the next six months improved materially, reflecting greater confidence about future business conditions and job availability.”

“While income expectations ticked down slightly in June, new questions included in this month’s release found a notably brighter outlook for consumers’ family finances: Around 30 percent expect their family’s financial situation to be ‘better’ in the next six months, compared to less than 14 percent expecting it to be ‘worse.’ This might reflect consumers’ belief that labor market conditions will remain favorable and that there will be further declines in inflation ahead. Indeed, the 12-month forward inflation expectations gauge fell to 6 percent in June, the lowest reading since December 2020.”

“Although the Expectations Index remained a hair below the threshold signaling recession ahead, a new measure found considerably fewer consumers now expect a recession in the next 12 months compared to May. Meanwhile, on a six-month moving average basis, plans to purchase autos and homes have slowed, after picking up earlier in 2023. This may reflect rising costs to finance big-ticket items as the Fed continues to raise interest rates. Meanwhile, vacation plans within the next six months continued to flag, led largely by declines in plans to travel domestically. This is an important indicator of desires to spend on services ahead, which may be a signal that post-pandemic ‘revenge spending’ on travel may have peaked and is likely to slow over the rest of this year.”

Present Situation

Consumers’ assessment of current business conditions was more positive in June.

23.7% of consumers said business conditions were “good,” up from 19.7% last month.
16.3% said business conditions were “bad,” down from 16.7%.

Consumers’ appraisal of the labor market also improved.

46.8% of consumers said jobs were “plentiful,” up from 43.3%.
12.4% of consumers said jobs were “hard to get,” slightly lower than 12.6% last month.

Expectations Six Months Hence

Consumers were marginally more optimistic about the short-term business conditions outlook in June.

14.2% of consumers expect business conditions to improve, up from 13.2%.
Meanwhile, 17.7% expect business conditions to worsen, down from 21.4%.

Consumers’ assessment about the short-term labor market outlook wasmore favorable.

15.5% of consumers expect more jobs to be available, up from 13.8%.
Moreover, 16.0% anticipate fewer jobs, down from 21.1%.

Consumers’ short-term income prospects worsened in June.

16.9% of consumers expect their incomes to increase, down from 18.9% last month.
11.9% expect their incomes will decrease, up from 11.4% in May.

Family’s Current Financial Situation

Consumers’ assessments of their current situation reflect largely healthy family finances in June.

28.5% of consumers say their current family financial situation is “good,” down slightly from 29.2% in May.
18.2% say their current family finances are “bad,” down from 19.5%.

Family’s Expected Financial Situation, Six Months Hence

Consumers’ expectations of their family finances in six months’ time reflect a relatively buoyant outlook.

30.3% of consumers expect their family finances to be “better,” up from 28.9% in May.
13.7 % expect their family finances to be “worse,” down from 14.9%.
This positive outlook might reflect consumers’ expectation that labor market conditions will remain favorable and that there may be further declines in inflation ahead.

Perceived Likelihood of a US Recession over the Next 12 Months

After rising steadily since August 2022, recession fears appear to have eased considerably in June.